Michigan Governor Signs Into Law “Flat Tax” to Make State Competitive Again

Area Development News Desk

05/27/2011

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Michigan Gov. Rick Snyder has signed into law $1.7 billion in business tax cuts designed to jumpstart new job creation and make the state highly competitive again for new business investment. The cuts are effective January 1, 2012.

"The Michigan Business Tax [MBT] was a disaster--it was not only unfair, it was a dumb tax," Snyder said before signing the bill this week. This is going to make us competitive, this will create jobs. And that's exciting."

Since the new business tax will be "flat" with minimal exemptions and exceptions, for the first time in decades Michigan business owners and managers will be able to calculate their taxes "on the back of an envelope," said a Michigan Economic Development Corporation communication.

"There will be many.who will do better under this scenario, but there will be many who do worse," noted Michigan Manufacturers Association VP Mike Johnston. "We need to make sure all manufacturers are reducing their tax liability in order for us to be competitive."

Currently nearly 136,000 businesses pay the MBT. However, only about 41,000 businesses will pay the six percent corporate income tax replacing it (source: Department of Treasury).

Business Leaders for Michigan--the state's business roundtable-called said the new the tax the "single biggest improvement to Michigan's job climate in almost two decades." Its CEO/President, Doug Rothwell, added that the "simpler, fairer tax structure" will allow the state to "more competitive and as a result, grow jobs."

Not everyone agrees with the MBT replacement tax. According to a story published by the Pontiac, MI-based Oakland Press, "critics argue businesses are getting $1.8 billion in tax breaks at the expense of seniors and the poor."